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The wood sector must always keep green

08:11 | 03/07/2018

VCN – Having suffered a "bad reputation"  from supporting deforestation, over the years, the wood industry is gradually eliminating this prejudice by putting more efforts on linking, and at the same time creating incentives for afforestation and other related economic industries. This creates a plentiful supply of raw materials, laying the foundation for the sustainable development of the wood industry in the future. Reporters of Customs News spoke with Mr. Huynh Van Hanh (the picture), Vice Chairman of Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) on Win-Win strategy between afforestation and wood processing.

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Mr. Huynh Van Hanh. Photo: Nguyễn Hiền

Currently, there are many concerns that with the goal of exporting $US 9 billion this year, the wood industry will face many difficulties in terms of raw materials. What are your opinions on this issue?

Over time, the shortage of raw materials is the problem which is discussed mostly among businesses. In fact, this story is only in rubber wood (south) and acacia (some provinces in the North). And if we take it as a difficulty for the industry, it is an incomprehensible look and lack of faith.

When the National Assembly decided to plant 5 million hectares of forest, the goal was to green the barren hills. Although the result was not complete, only 50% of the area, but economic forests also reached 1.5 million hectares, plus 700,000 hectares of rubber tree forest at that time. Currently the area for rubber forestry has increased to 1 million ha. From 2011 (the year of the 5 million hectare reforestation project) up to now, 200,000 hectares of forest have been developed each year. At present, there are about 2.5 million hectares of forest in Vietnam. In total, with 1 million ha of rubber tree forest it is 3.5 million ha.

With this area, last year supplied the wood furniture market valued at $US 2.5 billion. Meanwhile, wood imports are $US 1.5 billion. It is clear that in the $US 2.1 billion in import value of timber published by the General Department of Vietnam Customs includes wood, artificial boards and furniture, which accounts for about $US 1.5 billion. As a result, the wood used in the wood processing industry is very high.

The use of planted-wood materials in the country has stimulated more forest planters to meet the demand for wood and to make Vietnam green. The 10-year exploitation cycle is optimal, every 1 year of exploitation has 9 years for green coverage. As such, wood processing is an environmental business as it stimulates afforestation and forest development.

In addition, the industry employs about 419,000 workers at factories with an average yield of about $ 23,000. In addition, there are 3 laborers working in each factory and supporting industries. This is a livelihood industry, as it creates conditions for millions of workers to participate in the supply chain from plantation to technical labor in factories and labor in the other sub-sectors.

Does this mean that the wood industry is creating motivations for other economic sectors in other value chains?

That’s right. Afforestation, manufacture of panels, machine building ... are the industries that receive positive effects from the spillover of the wood industry. Nowadays, Vietnamese people use trees effectively. Specifically, most wood is sawed, dried and delivered to the processing plant, the wood margin is chopped for particle board and artificial board, and sawdust is now made into tablets for export. The tablet market also brings significant sales to Vietnam.

As such, the source of planted wood is not depleted but also saves lots of transportation costs. Previously, businesses have to transport timber from around the central region to the south with great expense, now it can be sawed for particle board production in place, resulting in significantly saving costs of importing boards and reducing the amount of raw wood chips exported abroad.

In particular, the wood industry also affects the processing industry, manufacturing, oil ... Previously, all types of machines for wood processing were imported. But the country has produced semi-automatic machines. Even colored oil is produced in the country instead of imported as before, but also Vietnam has exported abroad. Three years ago no one dared to think of the wood processing industry as able to export machines to go abroad, and no one thought of exporting oil, but today it has come true. Vietnam's wood processing machines have gone to countries in South America like Bolivia, and many Asian countries such as Myanmar, Cambodia, ...

There are opinions that if the wood processing industry is growing, then at some point it will run out of raw materials, what do you think about this?

According to my calculations, Vietnam does not need to plant more forests. With the current 2.5 million hectares, each hectare is planted with about 2,000 trees, in the fourth year, thinning and harvesting 200 tons of macadam retains 500 trees, by the 10th year each hectare harvests 150 m3 wood and 200 tons. At present, only 120,000 ha are harvested every year. While Vietnam has 2.5 million hectares, it is possible to replace more than every ten years.

Could you share some information about the linkage between enterprises and the afforestation households in recent years?

In the past years, Vietnam has formed many models of linkage between enterprises and afforestation households and has brought efficiency into play. In the North, there is a model linking Woodland with forest planters in Tuyen Quang and Nafoco Company in Nam Dinh with farmers in the Northwest. These links are intended to help forest planters develop sustainable forest governance certificates (FSC).

In the south, a successful model is the link between Scan Pacific Company and 609 households in Quang Tri. The company supports the planters the cost for assessment of FSC certification, a committee for planters to get funds with low interest rates of 0,2 % per year with the annual average interest rate of domestic banks at the time of borrowing in order to help households extend the cycle of planting trees to create a large source of timber. The company is also committed to purchasing FSC certified wood at least 15-20% higher than the market value of untreated wood at the time of transaction. In addition, the company also opened a sawmill in Quang Tri to gather timber for sawing, and a kiln was also built to pre-process timber and then transport to the city. In the future, the company plans to invest in a particle board factory to make full use of the available wood.

Those models will help enterprises have a source of legal timber, enhance their reputation with foreign partners and create a sustainable development platform for the wood processing industry in the future.

Thank you so much!

Mr. Tran Quoc Manh, Chairman of the Board of Directors of SaiGon Trading Development Joint Stock Company (Sadaco):

The growth of Vietnam's wood products is still great. In the United States alone, Sadaco's revenue has grown rapidly and accounts for 60% of the company's total export turnover. However, the market share of Vietnamese furniture here is still quite small. This market has very strict requirements, so to bring the goods here, the company must ensure both factors simultaneously: productivity and quality to reach the sophisticated requirements. In addition, US orders for furniture are very large, average 100 to several hundred containers per month. Therefore, Vietnamese enterprises need to expand the scale, automate the production line ... to ensure orders. Sadaco is seeking to buy a foreign wood company based in Binh Duong to improve its production capacity. Accordingly, Sadaco will purchase about 70-80% of the capital of this company and also coordinate management, restructure the company and equip new machinery and technology to meet the increasing requirements of the American market.

Mr. Nguyen Liem, General Director of Lam Viet Company:

It is forecasted that orders of the wood industry in the coming years will continue to grow as the demand for furniture in the world increases, while the area of wood production in the world has not increased. Vietnamese enterprises need to quickly grasp this opportunity to grab the market before rival competitors do. Enterprises need to overcome difficulties that are: The cumulative capital of enterprises is not much, while the credit is limited because the timber industry is connected with real estate, so companies encounter some difficulties in capital for investment in equipment and production expansion. In addition, the problem of labor is also a big challenge for wood enterprises. The labor force from the majority of universities does not meet the needs of enterprises. Over time, some companies tend to make associations to arrange training at schools, but the curriculum at the schools are very old-fashioned, compiled from about 20-30 years ago, unsuitable given the current reality - which is changing drastically due to the impact of technology. While the new curriculum development takes a lot of time due to the many stages of assessment, approval...

By Nguyễn Hiền/Thanh Thuy